## Facts

- 1545 Ocean Avenue, LLC was formed in 2006 by two 50% members, Crown Royal Ventures, LLC and Ocean Suffolk Properties, LLC, to purchase and develop commercial rental property in Bohemia, New York.
- The operating agreement established a manager-managed structure with two managers: one affiliated with each member.
- The LLC purchased the property in January 2007 and planned to rehabilitate an existing building (Building A) and construct a second building (Building B).
- A construction company owned by Ocean Suffolk’s affiliated manager performed work and billed the LLC; the parties disputed whether the work was properly authorized, its cost, and its quality.
- Disagreements escalated into mutual distrust and conflict about project management and decision-making.
- Crown Royal petitioned for judicial dissolution under New York LLC Law § 702, asserting that the relationship had broken down and the LLC could no longer function as intended.

## Issues

1. What standard governs judicial dissolution of a New York LLC under LLC Law § 702.
2. Whether dissension and alleged deadlock between equal members in a manager-managed LLC, without more, establishes that it is “not reasonably practicable” to carry on the business in conformity with the operating agreement.
3. Whether the record showed that management was unable or unwilling to permit or promote achievement of the LLC’s stated purpose.

## Decision

- The Appellate Division, Second Department reversed the dissolution order and denied the petition.
- The court held Crown Royal did not prove grounds for dissolution under LLC Law § 702.
- The court concluded the evidence did not show that the LLC’s management was unable or unwilling reasonably to pursue the LLC’s stated purpose or that continued operation in conformity with the operating agreement was not reasonably practicable.

## Legal Principles

- LLC Law § 702 requires a showing that it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.
- The operating agreement is the primary reference point for analyzing dissolution because it defines the LLC’s purpose and governance.
- Dissolution is not justified solely by member discord or deadlock; the conflict must materially prevent achievement of the LLC’s stated purpose under the operating agreement.
- In a manager-managed LLC, the analysis centers on whether the management structure can still function to move the business toward its contractual purpose, not merely on strained member relations.
- Corporate and partnership dissolution doctrines based on oppression or deadlock are not automatically imported into the LLC context where inconsistent with § 702’s contract- and purpose-focused inquiry.

## Conclusion

The court rejected dissolution because the petitioner failed to show that conflict between equal members made it not reasonably practicable for the LLC to operate under its operating agreement and pursue its stated real-estate development purpose.


Matter of 1545 Ocean Ave., LLC, 72 A.D.3d 121 (N.Y. App. Div. 2d Dep’t 2010)